“Can I still receive disability benefits if my employment is terminated after I’ve exhausted my Family and Medical Leave?” This is a common question we often receive from individuals navigating the complexities of employment, medical leave, and disability insurance. In this article, we will address this concern and shed light on the relationship between employment termination, the Family and Medical Leave Act (FMLA), and disability benefit payments. Let’s explore the rights, nuances, and potential implications that arise when employment comes to an end following the completion of FMLA leave.

As the following discussion explains, the short answer to the question is generally, no.

The Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act was a major employment law passed by Congress in the 1990s to allow workers to take up to 12 weeks of leave due to the birth or adoption of a child, serious illness, or an immediate family member’s serious illness. Although FMLA leave is unpaid, employees are guaranteed the right to return to their job or an equivalent job when their leave ends so long as they are able to do so within the 12-week period and so long as their job has not been eliminated.  (It is also possible to take Family and Medical Leave intermittently, but that topic is separate from this discussion).

The Family and Medical Leave Act does not require employers to pay their employees while they are on leave, but employers who provide employees with paid leave or short-term disability benefit programs allow employees to be compensated during their leave, which runs concurrently with leave under the FMLA.  However, if the employee is unable to return to work by the end of the 12 weeks required by the FMLA unless the employer offers extended leave beyond what the FMLA requires, it is not unlawful for an employer to terminate an employee who has taken FMLA leave, although the employee should remain eligible for rehire in the event the employee is able to return to work at a later date. Rehire is not guaranteed, though, nor is there a guarantee of rehire into the same or an equivalent job. It is also important to note that the FMLA is separate from the Americans With Disabilities Act (ADA).  Although the ADA protects employees on account of their disability, the law does not offer protection to employees who are unable to work with or without an accommodation.

What Is the Relationship Between the FMLA and Disability Insurance Payments?

While the FMLA permits a leave of up to 12 weeks, short-term disability benefits often run for 26 weeks or 180 days.  If the employee is terminated from employment after 12 weeks, would the job termination also terminate disability benefit payments as well? So long as the employee’s disability leave started during active employment (i.e., working at the employer’s place of business or at an assigned or permitted duty location), the employee would remain eligible to continue receiving disability payments.  In addition, the employee also remains eligible to receive long-term disability benefits when the short-term disability payments expire.  However, if an employee becomes disabled after ceasing active work, there is no entitlement to receive disability benefits.

Related Article:  What Is the Difference Between Short-Term Disability and Leave Under the Family and Medical Leave Act?

Is There Eligibility to Received Unemployment Compensation if Employment Is Terminated While the Employee Is Disabled?

 No.  To be eligible to receive unemployment compensation benefits, a terminated employee is required to certify their ability to work.  If the employee is claiming to be disabled, applying for unemployment compensation requires the employee to make representations that are contradictory to the claims asserted to receive short-term disability payments.  Thus, applying for unemployment compensation may undermine a pending short-term disability claim.

Can an Employee Receive Severance and Disability Benefits?

The answer is generally no.  If an employee is terminated and offered severance, acceptance of a severance payment is predicated on the employee releasing the employer from liability for any claims the employee may have against their employer.  Even if the severance agreement the employee signs makes no mention of the insurance company providing disability benefit payments, or does not explicitly state that a release of the employer’s liability also releases the right to continue receiving disability benefit payments, there have been court rulings which have found the acceptance of severance terminates the employer’s right to receive additional disability benefits or sue the insurer if disability benefits are denied.

It may be possible to put language in the severance agreement that preserves the employee’s right to pursue disability benefits, but since short-term disability payments are often paid by employers and only administered by insurance companies, most employers are unwilling to allow employees to receive a severance payments and also continue to receive disability benefits.  Moreover, even if the employee negotiates the right to pursue a disability benefit claim, any severance payments received by the employment may be offset against the disability benefits and reduce the amount of those payments. 

What Should an Employee Do if Disability Payments Are Stopped Following an Employment Termination?

If benefits are stopped on account of employment termination while the employee remains disabled, the employee should demand an explanation.  The federal law governing employee benefits for all private-sector workers has a provision that makes it unlawful for employers to terminate employees for the purpose of cutting off promised benefits.  Some courts have even recognized that when an employer offers short-term disability benefits to their employees, an employee who is disabled has a “right to stay home” and utilize the benefits that are offered.

If the employer or insurer fails to offer a satisfactory explanation for a disability benefit cessation following employment termination, the employee should promptly seek legal advice from an experienced attorney who is knowledgeable about these issues.  An attorney can investigate the circumstances and institute legal action if appropriate.

How Can Employees Navigate Through The FMLA, Termination of Employment and Continuation of Disability Benefits Issues?

The best way for an employee to navigate through these issues is to seek prompt legal advice and counsel from an experienced benefits attorney who is knowledgeable about the issues described above.  There can be many nuances that impact how the issues discussed above are resolved, and there is no “one size fits all” approach that governs every situation.

But the bottom line remains that a termination of employment is legally permissible once FMLA rights expire; however, that should not preclude the continuation of disability benefits so long as the employee remains disabled and meets the terms of the insurance policy or benefit program governing the employee’s eligibility to receive benefits.

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